Shanghai, Brazil mull cross-listings: report

Bloomberg

Fri, Feb 18, 2011 - Page 10

The Shanghai Stock Exchange and BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, will sign an agreement that may lead to cross-listings of stocks, the Financial Times (FT) reported yesterday, citing an unidentified official with the Sao Paulo-based company.

Cross-listings would give Brazil’s biggest companies such as Vale SA access to Chinese capital and allow them to be traded through the Asian day, the FT reported.

An official at BM&FBovespa’s representative office in Shanghai, who declined to be identified because of company rules, said a memorandum of understanding would be signed on Monday in Brazil, but did not give details.

The agreement is aimed at boosting international cooperation and exchanging information, said a spokesman at the Shanghai Stock Exchange, who also declined to be identified or give details because of company rules.

“This would be hugely positive for Chinese stocks,” said Michael Yoshikami, who oversees US$1 billion at YCMNet Advisors in Walnut Creek, California. “It’s positive any time you can have cross-border trading in two of the fastest-growing economies in the world. It comes down to Brazil and China wanting more access to capital.”

Shanghai, China’s commercial hub, is striving to become a global financial center by 2020 and is seeking to attract the world’s biggest companies for an international equities board that the exchange plans to start this year. Cross-listings would also boost the international competitiveness of the exchange at a time when global exchanges are merging.

Deutsche Boerse announced a proposed US$9.53 billion takeover of New York-based NYSE Euronext on Tuesday, less than a week after London Stock Exchange Group PLC agreed to purchase TMX Group Inc of Toronto for about US$3.1 billion.

In October, Singapore Exchange Ltd offered more than US$8.3 billion for Sydney-based ASX Ltd, which runs the Australian stock market.

The Shanghai Composite Index has gained 4.2 percent this year after dropping 14 percent last year, the worst performer among benchmark indexes in the world’s 10 biggest markets, according to data compiled by Bloomberg.

Shanghai is making preparations to add the international board to its stock exchange, and officials hope it will start this year, Shanghai Daily reported yesterday, citing Vice Mayor Tu Guangshao (屠光紹).

The city wants to allow residents to invest overseas directly, the daily ssaid.

Vale, the world’s biggest exporter of iron ore, may seek a listing in Shanghai when it’s possible, chief financial officer Guilherme Cavalcanti said on Dec. 5. The company made its debut on the Hong Kong stock exchange on Dec. 8, seeking to increase its profile in its biggest market. Petroleo Brasileiro SA, the state-run oil company, was considering selling depositary receipts in Hong Kong, the Ming Pao newspaper reported Nov. 16.

“Fifty percent of our sales are directed to Asia and almost 40 percent to China,” Cavalcanti said on Dec. 8 in Hong Kong.